This invention relates generally to systems and methods for payment processing support for mobile devices, or other nontraditional Point of Sales (POS) platforms. Such systems and methods enable smaller merchants the ability to more readily accept credit card, and other forms of payment using a device (often mobile such as a tablet or smart phone) and a magnetic reader peripheral device, without the need for extensive developer API integration.
Payments can traditionally be performed using cash, magnetic credit card or debit cards, or using a check. Other payment mechanisms, such as smart credit cards, have never experienced the success in the marketplace that these more traditional forms of payment have enjoyed. Given the increasingly prominent role credit/debit cards are having as payment mediums, merchants have greater incentive to accept these payment forms in addition (or instead of) cash or check. In fact, it is nearing the point that even small merchants, or mobile merchants, are even required to accept credit card transactions, or otherwise lose out on business.
In response to this growing need for affordable and small credit card processing, a number of companies have developed systems that take advantage of the growing prevalence of smart phones and tablets. These systems typically include a peripheral device capable of reading the magnetic information on the payment card, and utilize the processing power and network connectivity of the respective mobile device in order to complete the transaction. An example of such a peripheral device system is Square.
While such systems have gone a long way to enable virtually anyone to accept credit card transactions, these systems are still plagued by issues relating to developer integration. For example, the Square device is designed to operate in conjunction with their integrated POS system and payment backend. The user of the Square device is essentially forced to use the processor that Square has agreements with. Likewise, the user is pigeonholed into the pricing scheme that Square and the backend payment processor have agreed to.
If the user wanted to use the peripheral device with another payment processor, or point of sales system, a developer would need to integrate directly to the peripheral device. This is a substantial undertaking in itself, but when viewed against the numerous peripheral devices available, the task soon becomes overwhelming. For this reason, generic peripheral card reading devices have not seen widespread adoption. Additionally, most merchants are indeed forced to use the pre-developed POS system and backend that is typically supplied by the device supplier. This adds significant costs to the merchant. For example, at the time of this disclosure, the cost per transaction over a standard payment processing network varies between 1.5-2.3%. In contrast, the fee imposed by Square, as a comparison, is at 2.75%. Considering that smaller merchants already are faced with higher overhead and smaller margins than larger retailers, the fact that they are then subjected to higher fees may indeed impact their ability to compete in the market.
It is therefore apparent that an urgent need exists for systems and methods for payment processing from these nontraditional POS systems which decouple the device peripheral from the payment processing, without the need for extensive developer integration. Such systems will have the benefit of providing greater market availability to merchants and POS developers.